Siemens' profits dented by fine

Siemens has posted revenues of €19.1bn for its first quarter of 2007, a rise of six per cent on the same three-month period last year.

The European technology and utility giant also announced that new orders rose four per cent to €24.5bn.

Siemens said on Thursday that operating profits rose by a whopping 51 per cent to €1.63bn during the three-month period ended 31 December 2006.

"In terms of the underlying performance of our business, the first quarter got the fiscal year off to a strong start," Siemens chief executive Klaus Kleinfeld said.

"Order growth was particularly satisfying, considering that the prior-year basis of comparison was already quite high. We also brought more of our revenue growth to the bottom line, with a substantial increase in Group profit from operations," he added.

Net income totaled €788m, a decline of 16 per cent compared to the €939m recorded a year ago. However, this did include a huge €423m penalty levied by the European Commission. The commission ruled that Siemens (and a number of other companies) had fixed the price of equipment used to control electricity flow.

Overall, the commission fined 11 European and Japanese companies €750m on Wednesday for price fixing and other restrictive practices. Among the other technology firms to be penalised were Mitsubishi and Toshiba, however the lion's share of the fine was dished out to Siemens.

"While it is disappointing to see our net income growth reversed by an impact from events in the past, we are moving on with our operations tremendously improved year-over-year," said Kleinfeld about the EU fine.

Basic earnings per share were €0.83 during the first fiscal quarter of 2007 while diluted earnings per share were €0.80.

Income from continuing operations rose 18 per cent to €714m compared to the year ago period.

In related news, the company announced the acquisition of UGS, a Texas-based software firm for USD3.5bn on Thursday. The German company also said that it intends to sell shares in its automotive engineering unit, VDO Automotive. Siemens will retain majority control of VDO, which is the world's largest maker of electronic systems that help deploy car air bags, after the IPO.